in index.php find:
WHERE i.image_active = 1 AND c.cat_id = i.cat_id AND i.cat_id NOT IN (".get_auth_cat_sql("auth_viewcat", "NOTIN").")
Replace it with:
WHERE i.image_active = 1 AND c.cat_id = i.cat_id AND i.cat_id NOT IN (".get_auth_cat_sql("auth_viewcat", "NOTIN").") AND NOT c.cat_parent_id